The extra and hidden costs of bringing in feed can often mean increased milk production, but not increased operating profit.
Where once you might have seen half a dozen brands on any liquor store shelf, now you can find three times as many.
It is Britain that is leading the way, with reports earlier this year of 315 distilleries in the country, which is more than double that of five years ago. As consumers fall in love with gin all over again, overall sales rose in the UK by 20 percent in just 12 months.
What does this mean for sales of wine in the same market? Well according to Sarah Benson, an MW student, who is also the wine buyer for The Co-op in the UK, (a company that has nine percent of the off-trade market and a total of 2800 stores), it is a warning for wine producers everywhere.
Speaking at the Lallemand Oenology conference in Blenheim in May, Benson had some startling facts to back up her warning. Drawing from facts from a Neilsen survey of the Global Wine Market, she said volume sales are expected to grow by 1.9 percent by 2020. As she said, at least that is a sign of growth, but she warned that it is coming from two very definite markets.
“It is influenced by the Chinese and Russian markets. Throughout Europe, and this is countries with a long tradition of wine production such as France and Spain, there are heavy declines in terms of the consumption of wine. Also in markets like the UK.”
If Russia and China were taken out of the equation, Benson said, then the volume sales growth would look a bit dire.
“We have been relying on that growth in the Asian markets in particular, to bolster sales, and not perhaps having enough of a wake-up call in terms of the decline we are heading into.”
Global consumption of wine is up, 1.2 percent, but again the majority of that growth is coming out of Asia. Consumption of wine in America is flat, and in Europe it is down.
In her words, gin and beer are the wine world’s greatest competition.
“In The Co-op in the last 12 months, our gin sales have gone up by 65 percent. I can’t say the same for wine sales. In the total UK market in the last 12 months, we have lost £6.5 million of spend that was previously going into wine.”
There are many reasons touted for the rise of both beverages. The craft beer scene throughout the world has grown exponentially and the arrival of gin bars, parties and menus along with an increasing number of flavoured tipples is attracting younger consumers.
And this is where Benson says wine producers need to start working.
They need to seriously attract younger consumers. “If we are not careful and the older shoppers drop off we might end up with an even smaller market to sell out wine to.”
Benson pointed out that 85 percent of the spend value of wine in the UK market is coming from those over the age of 45.
Only 16.6 percent of shoppers under the age of 34 are purchasing wine. Just over half when compared with the shoppers over the age of 65.
There is also a marked increase in the number of young people dropping out of drinking alcohol completely. Twenty percent of all consumers under the age of 25 identify themselves as tee total.
The figures provide the wake-up call Benson believes the wine industry needs.
“We have to change that. How do we get people to stay in wine, be excited by wine, want to spend more on wine and (how do we) attract younger consumers?”
She had some ideas, for turning the table. For example, she believes wine producers have to take on board what craft brewers have done to improve their sales.
“The beer producers are much more open about talking about how they have made their beer. Maybe there isn’t enough conversation about the winemaking side going on at consumer levels to make them interested in wine as a craft beverage.
“At the end of the day, we are talking about an agricultural product that varies every single year and yet we are not, for whatever reason communicating that to consumers.”
Food for thought.
The UK facts
- Gin sales at The Co-op in the UK rose by 65 percent in past 12 months.
- The UK market has lost £6.5 million of wine spend in the past 12 months.
- 20 percent of all UK consumers under the age of 25 describe themselves as tee total
- 85 percent of the spend value of wine comes from those aged over 45.
- In The Co-op wine aisles, the average time spent deciding on what wine to pick up is 7 seconds.
- Consumers on average make 273 shopping trips a year – but only 14 percent of those include a wine purchase.
- The average alcohol consumption rate in the UK is two times a week.
• We will have more from Sarah Benson in the next issue of NZ Winegrower, regarding her project that considers whether critics and buyers are in tune with consumers.